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Usually BIDS/VS does actually overwrite the existing report but I've seen issues with it in the past. The best way to make sure you've got the newest version installed on the server is to first delete it... Not perfect but it works.

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They've probably implemented it this way on purpose. Through Report Manager you can set custom values for report parameters for instance, so if they'd overwrite the report then this parameter could cause issues. But still, an additional setting to let us choose would be preferred... Who knows, some day...